Public Bill Committee

[Sir Nicholas Winterton in the Chair]

Nicholas Winterton: It is 4 o’clock and although we are living in very interesting political times, we have to direct our undivided attention to the Bill. I want no mention of other matters during contributions to the debate and I always look forward to progress when I am in the Chair. When the Committee adjourned, the hon. Member for North Southwark and Bermondsey was moving his amendment. I know that he has further words of wisdom to utter, so I ask him to resume his speech.

Clause 138

Limitation on value of directions under the ombudsman scheme

Amendment moved [this day]: No. 234, in clause 138, page 72, line 32, leave out ‘£20,000’ and insert ‘£100,000’.—[Simon Hughes.]

Nicholas Winterton: I remind the Committee that with this we are discussing the following: Amendment No. 265, in clause 138, page 72, line 32, leave out ‘£20,000’ and insert ‘£50,000’.
Amendment No. 266, in clause 138, page 72, line 39, leave out subsection (3).
Clause stand part.

Simon Hughes: Thank you, Sir Nicholas. We are very glad to welcome you back to the Chair. I know that you have come here flushed with excitement at events elsewhere and I would not dream of suggesting anything out of order, other than to say that the amendment proposes a change far less unexpected than the events of the past hour, which could be called the Lincolnshire development.

Kevan Jones: Much less welcome!

Simon Hughes: The amendment is much more welcome.

Bob Neill: Will the hon. Gentleman give way? I just want to say—

Nicholas Winterton: Order. There can be no reason whatever for the hon. Gentleman, who is a lawyer, to intervene at this point.

Simon Hughes: A consensus of view was just about to break out in the Committee. However, we will try to bring ourselves back to the more mundane and predictable matters in hand.
The amendment would increase the total amount that the ombudsman could decide was an appropriate remedy in financial terms from £20,000, which is the figure in the Bill, to £100,000. I hope that the Minister, refreshed by her three hours in other places, will be as positive on this amendment as she was earlier. The temperature is slightly warmer, and the Minister’s perfume is still reaching this side of the room, where it is very much appreciated. [Interruption.] Her colleagues may not appreciate it, but we do. We hope that she will feel generous in any event and because of our keenness to see her back in her place.
The figure in the amendment was not plucked out of the air, nor was it chosen just for the purpose of having a debate. I have a very clear view that if we limited the upper amount that the ombudsman could award for everything—it is the inclusive, total amount, the aggregate amount, as clause 138 goes on to describe—to £20,000, that would be too low in many circumstances. If the Office for Legal Complaints is to be effective and seen to be effective—if justice is to be done and seen to be done—consumers need to know that they can have decent redress for high-value claims.
There are various examples, but I shall give two obvious ones. Let us say that something went terribly wrong in a personal injury action that someone had taken; the solicitor had completely messed it up. It is well within the realms of contemplation that £20,000 would be an entirely inadequate remedy. If someone’s conveyancing was completely messed up, it is very possible that the damage suffered would be worth more than £20,000.
It is not clear why the figure of £20,000 was chosen. The Law Society’s current limit is £15,000, but other ombudsman schemes have significantly higher figures. Again, I have drawn on the best parallel that we all have, which is the financial ombudsman scheme, for which the redress limit is £100,000. There should be a comparable starting point.
There are non-statutory regimes such as the ombudsman scheme for estate agents. Incidentally, it is probably good to know that there is one. I was not previously aware of it, but I can imagine people being angry with estate agents, too, and feeling that they have been misled by them on occasions. Even that non-statutory scheme has a maximum redress limit that is higher than that proposed in the Bill—I think that it is £25,000.
The Minister will tell the Committee, if I do not, that clause 139 allows a variation in the redress limit, on the recommendation either of the consumer panel or of the OLC. In my honest view, that is to allow, quite properly, for relatively small adjustments to take account of inflation or other things. It is not intended to allow for a significant change. Similar provisions have been made in other legislation to allow for flexibility, but not for a fundamental change of starting point.
I propose that we start at a realistic level. If we do not, there will soon be pressure to change it. It is better to set it too high and to allow it to be the upper level from the beginning. Otherwise, there is a severe danger that people will say that the legislation is a lot of sound and fury signifying not very much when it comes to delivery. We might get an apology or an admission of failure, but in a day and age when, on Lewisham or Borough high street, house prices do not start at £20,000 or even £100,000, but at £200,000 or £250,000 for a one-bedroomed flat, we need to compensate complainants at a realistic 2007 level for their financial loss.

Kevan Jones: In speaking to amendment No. 265, I am working on the reverse principle of the one that I used as a trade union official. The hon. Member for North Southwark and Bermondsey suggested a limit of £100,000; I thought that I would be modest and say £50,000, on the basis that the Minister, given some options, might wish to accept the lower amount.
The hon. Member for North Southwark and Bermondsey made some serious points. I can give an example from my experience of a situation in which the £20,000 limit would be have been unacceptable and would have failed to deliver justice to one of my constituents. I raised it on Second Reading. I shall refer to the constituent as Mrs. X, because I do not think that she wants her name in the public domain. She was a miner’s widow from Stanley, in my constituency, who had the misfortune to be involved with a solicitors’ firm in Newcastle called Mark Gilbert Morse. She was making a chronic obstructive pulmonary disease claim for her late husband. She is an elderly lady—she is in her 70s—who does not understand the law or the way that lawyers work, and she rightly expected the solicitors to act in her best interest.
Last year, the Department of Trade and Industry made an offer to Mark Gilbert Morse to settle the claim for £42,000. Without Mrs. X’s knowledge and without contacting her, the solicitors rejected that offer on her behalf and said that they would like a higher figure. There was great shock six months later, when the Department of Trade and Industry came forward with its next offer, which was only £22,000. She contacted me at that point. I must give credit to the Legal Complaints Service, which investigated the complaint and shamed Mark Gilbert Morse into paying the £20,000 difference between the higher and the lower offers, so she got the original sum of £42,000. 
Under the Bill, the original figure would have been £20,000. People may argue that there are other means open to individuals such as Mrs. X, who could go to litigation, but there is no way in which she could afford that process or would risk the possibility that she might not get the higher figure. The figure as it stands—£20,000—is too modest in the case that I cite.
Mining compensation cases have thrown up many cases in which solicitors have clearly not only given bad advice, but have not always dealt with the cases so the clients have had second best advice. I am worried about how many people have had the same experience as Mrs. X, but whose cases have not come to light.
The figure in the provision is modest and, as the hon. Member for North Southwark and Bermondsey said, the financial services ombudsman can award £100,000. I was not aware that there was an ombudsman for estate agents, but he can award £25,000. If we do not initially put a high enough figure in the Bill—I know that clause 139 allows the Legal Services Board to increase the amount—the resistance of the legal profession’s vested interests will prevent any great increase in the compensation figure. The Minister has said throughout the progress of the Bill that it should be about the rights of consumers, and the best way of protecting those rights is to set the figure at a high enough level to protect their interests. I would not hold out a great deal of hope that it will rise substantially over a period.
On the broader issue of compensation, something that has frustrated many of my constituents and those of my hon. Friend the Member for Bassetlaw is the prevarication by some solicitors in trying to settle cases, and the threats that they make. It never ceases to amaze me that in mining compensation cases, which involve poor and vulnerable individuals, arrogant solicitors do not seem to care how many threats they issue—for example, that if clients do not pay up or agree to a certain course of action, they may be held legally liable, even when they may not in fact be held liable for further costs. It is important to get the figure right now for consumers’ protection. If the Minister does not concede that today, it should be considered on Report.
I do not intend to speak to amendment No. 266, so I ask the Minister seriously to consider increasing the figure substantially today.

John Hemming: The point to recognise, particularly when dealing with claims against solicitors, is that if the claim is not made through the ombudsman process, another firm of solicitors must generally be employed. This area of regulation is complicated because there are all sorts of difficulties.
I shall cite a couple of cases in which a firm of solicitors let down their clients but monetary compensation was not the whole story. One of my constituents, who suffered from mental illness, was imprisoned because the court believed that he wanted a hospital order. He ended up being imprisoned because the solicitor failed to notice certain things in the paperwork. Oddly enough, I managed to draft an appeal, and the good news is that it will be heard. The difficulty was that the solicitors had clearly failed to do their job properly, and when they were asked for the paperwork they did not respond in a timely manner. One difficulty with appeals is that they generally have to be made within 21 days, and it causes great problems if people sit on the paperwork. If they do so for more than 21 days, it is a greater problem.
In another example that I have been looking at recently, it seems that some children were taken into care and adopted because correspondence went to the wrong address. The firm of solicitors involved is failing to respond to me, so I have written to the Law Society to ask it to intervene.
In such cases, there is no easy way of quantifying the loss, but in cases where someone will arguably have £1 million or £10 million—I was an expert witness in a case involving more than £250 million—people can afford to go somewhere and control the whole process. However, when it involves £25,000, someone could easily lose out. If we consider that somebody may have lost five years of their life in jail because of the incompetence of a firm of solicitors in not doing some basic things, it is clear that the system is quite difficult as it stands. Therefore the limit of £20,000 is far too low and my hon. Friend’s probing amendment—I presume that it is a probing amendment—is very good.

John Mann: I support the principle of increasing the figure to £20,000, but I am not particularly inclined to support the Liberal Democrat proposal because there needs to be a balance between regulatory financial remuneration and other actions that can be taken. It is important to recognise the need for balance.
The figure of £20,000 is a modest increase on the current limits for solicitors, but is too low because it would not catch those people who have lost out financially and do not want to trust another solicitor to engage in civil action to sue for financial remedy. Indeed, the amounts of money fall between what it is viable for a solicitor to present to a client in terms of likely incentive gain, because £100,000 would seem well worth fighting for through the courts if there was a loss. If it is a much smaller amount, people are much less likely to consider it worth fighting for. A balance must be drawn somewhere, but the figure of £20,000 is too low.
 I am dealing with a number of ongoing cases in which the amount of financial loss that can be quantified, aside from any compensatory loss, is between £20,000 and £30,000. Those cases are in a range of different areas—they are not all about industrial disease—but they are the exception and in the majority of cases the figure is much lower. The limit should incorporate the potential exceptions to the rule precisely because that would provide the full parameters and should not create any expectation of an upward drift overall. There is no logic in suggesting that there would be an upward drift. What the upper quartile of potential claims might be is important.
I suggest that £20,000 is not sustainable and that the figure needs to be higher. I am attracted to the suggestion of £50,000 made by my hon. Friend the Member for North Durham, but if the Minister proposes something more realistic that might also be acceptable. However, £20,000 is too low because there are too many cases in which the individual would win, but would lose out financially. That is why the figure needs to be increased somewhat to a more realistic amount.

Simon Hughes: From the hon. Gentleman’s experience of the sort of cases that he has shared with us, can he tell us about examples where, in his assessment, there was the highest loss relative in what someone was able to obtain?

John Mann: The highest loss that I have dealt with without having to go through regulation was £31,500. That was the actual financial loss. I have a significant number of ongoing cases in which I estimate the loss will average around £25,000. Therefore, in that context, there is a significant difference between £20,000 and £25,000, and £20,000 and £30,000. Such losses are significant, especially when they are the result of poor representation of whatever form. People’s health might be affected, so the money is not only compensation for a wrong, but a remedy that is calculated to take account of necessity.
 Industrial compensation payments is the best example of what happens when lazy solicitors manage not to put in claims. It might not be deliberate; a solicitor might not have said “I won’t put in for that because I don’t get paid much and I’m not bothered”. The laziness is of systems and approaches whereby solicitors manage to tick boxes, but fail to ask additional questions. The miners compensation scheme compensates people for things that they will not be able to do in future because of their industrial disease and amounts are calculated precisely. Financial compensation is required for things that need to be done—it is not a charitable donation or a sum in principle; it is for practical purposes.
A maximum of £30,000 would do in the cases that I know of, but there might be cases that would require a higher figure. A maximum of £20,000 would leave too many cases in which a person could win, but would have the trauma of taking civil action and of going to another solicitor. That is not sensible, both practically and with regard to the profession’s reputation.

Simon Hughes: I hear the figures. The hon. Gentleman is aware that there are two sorts of loss: a direct financial loss of wages, income, salary and pension; and a loss of the damages that compensate for injury such as the loss of the use of a limb. Is he saying that, in his experience, the total of the prospective claims would only be of the order of £30,000-plus? I know of cases in which the combination of loss of income plus damages would be considerably higher than £30,000.

John Mann: No, I am not saying that. There are exceptions to any rule.
The more endemic problem is when the obvious part of the claim is put in, but the less obvious parts are not. The more I investigate, the more that that type of case appears to be endemic in the system. The average necessary amount—the figure will vary—is around £20,000 or £25,000. Therefore, the figure of £20,000 is somewhat low, but there is no logic in setting the figure too low. The figure of £20,000 has been set by updating the current figure. That is rational, but it does not fully incorporate what will, by definition, be exceptional cases of actual loss, rather than compensatory loss for less quantifiable things. It would be prudent and sensible to increase the maximum amount—both sides of the Committee will feel that.

Bridget Prentice: Let me explain the rationale behind the £20,000 limit. It is based on the current maximum of redress in the Law Society, which was recently increased to £15,000. The Bar Council figure remains £5,000. Taking into account the fact that, on average, the awards made by both the Law Society and the Bar Council are somewhere between £400 and £500, the Government decided to increase the limit from £15,000 to £20,000 to take account of the time between now and when the OLC will be up and running. For the moment, that is an appropriate figure, but that does not mean that it cannot be increased in the future. That is why the hon. Member for North Southwark and Bermondsey mentioned clause 139, which allows for the Lord Chancellor, by order, to increase the limit if the board, the OLC or the consumer panel recommend it at any time. It is perfectly possible, for example, for the consumer panel on day one to make a recommendation that the limit be increased.
I want to make it absolutely clear that this rise is not just about dealing with inflation. It is also about allowing the board and the other interested bodies to increase the amount substantially if they thought that that was the right thing to do. It is on that basis that I ask the hon. Member for North Southwark and Bermondsey to withdraw his amendment.
It may be some comfort to the hon. Gentlemen to know that I have no personal attachment to the figure of £20,000. I hear the arguments that all parts of the Committee are making. A figure of £100,000 would be going way too high to begin with and if we look at some other ombudsman’s schemes, we see that their upper limits are slightly higher than £20,000. It may be worth considering the average figure of some of those schemes.
I also add that a series of groups gave evidence to the pre-legislative scrutiny Committee and almost all were in favour of a figure above £20,000, and I heard their arguments. Interestingly, the one group that was not in favour was the Legal Aid Practitioners Group, which said that it could not really imagine a situation in which the redress would be of that scale, or far beyond it. However, that is not the argument on which I am basing this limit.
As I said, I am not personally attached to the figure of £20,000. I would be happy to look at it again and to consider, across the board, other schemes to see whether another figure is more appropriate. However, it is important not to get too carried away, so that the consumer panel and the board itself can respond with a figure that they think is appropriate at the time; this measure is obviously not going to come into effect for a little while yet. Having argued in this Committee about the flexibility that we must give to the board, and so on, I do not want in any way to undermine that flexibility now. However, I would ask the hon. Gentleman to withdraw his amendment on the basis that I will look again at how this figure of £20,000 compares with the upper figures of other ombudsman’s schemes.

Simon Hughes: I hear what the Minister says, but I would like to press her on one matter; I do not think that she addressed it, so I apologise if she did and I missed it. Does she accept that the Financial Ombudsman Service has a £100,000 upper limit, which is the only absolutely comparable, or very nearly comparable, scheme? Does she accept that that is the upper figure for that scheme?

Bridget Prentice: The Financial Ombudsman Service certainly has that upper limit of £100,000 and there is quite a good argument as to why that scheme has that upper limit. However, I would like to see how many cases have got anywhere close to that £100,000 limit and consider where the awards are being given. That might help us to come to a better conclusion at a later stage.

Simon Hughes: I am grateful to the Minister for that response. Rather than us all trailing through the FSA’s ombudsman’s track record, if the Minister would be kind enough to press her buttons to produce that information, that would be really helpful.
I agree that, even if we get those figures, they will not be absolutely comparable, because we are talking about two different types of organisations and two different types of issues. However, I am very clear that we need a higher limit. I hear the Minister saying that she is not wedded to the current limit. She has heard voices from her own party arguing, from different perspectives, for a limit higher than £20,000. I sense that a higher limit would be where the centre of gravity of the debate is.
On the basis that the Minister will give us the comparable figures from other schemes and will then give us a chance to consider those figures and that she is not closed to the idea of us increasing the limit on Report, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 138 ordered to stand part of the Bill.

Clause 139 ordered to stand part of the Bill.

Clause 140

Acceptance or rejection of determination

Simon Hughes: I beg to move amendment No. 235, in clause 140, page 74, line 19, after ‘complaint’, insert
‘either while the ombudsman is considering the complaint or’.
The clause states at its end:
“Neither the complainant nor the respondent, in relation to a complaint, may institute or continue legal proceedings in respect of a matter which was the subject of a complaint, after the time when a determination by an ombudsman of the complaint becomes binding and final in accordance with this section.”
In other words, you cannot take legal action once you have been to the ombudsman and the ombudsman has decided. The amendment would prevent people from taking legal action while the ombudsman was considering a complaint as well as when it had finished doing so. I hope that the reason for that is obvious: it seems ridiculous to allow a legal process when at no separate court expense or report obligations the ombudsman is considering the matter. Let us keep to one process. The amendment would be a bar on two processes taking place at the same time. I hope that that is sensible and that the Minister will accept it.

Bridget Prentice: When I first looked at the amendment I wondered why a lawyer would bother to sue their client if they did not think that they would be successful. It would be a much more expensive process to pursue hopeless legal proceedings than to endure the ombudsman’s determination. I wondered whether it was therefore a situation that would never arise.
Whether it does or not, I cannot accept the amendment because it would have undesirable, although I am sure unintended, consequences. The reason for the provision in clause 140(11) is to achieve finality of determinations under the ombudsman scheme. An additional provision such as the amendment proposes would go considerably further and raise questions about the Bill’s compliance with the Human Rights Act 1998.
The amendment could prevent a lawyer from taking legal action or require them to put on hold ongoing legal proceedings in the interests of a process that might not produce a binding determination, as the complainant might not accept the outcome. That barring of access to a determination of civil rights and obligations does not seem appropriate to the end that is sought in the amendments, particularly given the unlikeliness of a lawyer pursuing unfounded claims through the courts, with all the attendant costs, simply to avoid an ombudsman’s determination.
 If a client was to refuse to pay legal fees, then it is clearly only right that the lawyer is able to recover those through the courts. If they could be stopped simply by the client making complaint to the OLC, that could undermine the court process and prevent the lawyer from seeking just restitution, which is obviously not a tenable position in which to put someone. The OLC could end up getting unnecessary complaints from those simply wishing to slow down or stop legal proceedings, which would clearly be a waste of the ombudsman’s time. We do not want to go down that road.
Let me explain how the Bill works with an unscrupulous lawyer trying to avoid or delay the complaints scheme by initiating legal proceedings, which is the other side of the same coin. Whether legal proceedings were begun before or after the complaint was made to the ombudsman scheme, the ombudsman would still be able to deal with the complaint. Whether it would be appropriate to do so in a particular case would be at the ombudsman’s discretion. However, rest assured that I consider it of vital importance for unscrupulous lawyers not to think that they can avoid a complaint by starting legal proceedings. They must realise that the ombudsman scheme is able to deal with all complaints.
The Bill, as drafted, gives suitable and sufficient protection. It already prevents the respondent from initiating or continuing legal proceedings once the determination has been accepted by the complainant. The intention here is to ensure that the determination is treated as a resolution of the matter in dispute, which I hope will provide respondents and complainants with the all-important certainty without which timely resolution of complaints and the informality of the system would be lost. On that basis, I hope that the hon. Gentleman will withdraw his amendment

Simon Hughes: The very mention that there might be a risk of the amendment not complying with the European convention on human rights is enough to frighten anyone into submission. As somebody who promotes the convention and all its works and has worked for the Council of Europe supporting it, I would not want to embarrass myself or anyone else. The Minister made what may be a good point about compliance, which our advisers and I had not thought about. Clearly we would not do something that was not compliant. For that reason, we ought to go away and look again. If there is a way of making progress without the problems set out by the Minister, then fine, but, if not, we may have to think of other solutions, by other means. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 140 ordered to stand part of the Bill.

Clauses141 and 142 ordered to stand part of the Bill.

Clause 143

Handling of complaints by approved regulator

Question proposed, That the clause stand part of the Bill.

Bridget Prentice: Here is one of those complicated areas of procedure where we have to have a stand part debate in order to negative the clause. The Government want to remove clause 143, which allows the board to direct that complaints may be
“determined by an approved regulator instead of an ombudsman”.
In other words, it allows complaints handling to be delegated. The clause was added in the House of Lords in support of the position held by the Bar Council and the Bar Standards Board.
 As I said on Second Reading and have said throughout the Bill’s existence, any form of delegation will undermine the principle of a single independent complaints handling body and will not in any circumstances restore consumer confidence in complaints handling. The clause has no place in a Bill that is about putting the consumer first. It must be removed, along with any amendments that refer back to it.
We all know that the clause comes from the Bar, which made no secret about the fact that it wants to continue to handle complaints about barristers. It will argue—I have its briefing for this debate—that it has an excellent record of complaints handling compared to the Law Society, or that complaints about barristers are much more complicated and no one other than the Bar can deal with them effectively. It will argue that complaints about barristers are almost inevitably intertwined with elements of substandard service and misconduct, which should be investigated by the same body, and that having two bodies to investigate a complaint will lead to inconsistent decisions. It will argue those points; we may well hear them argued today. It has argued them before, but the arguments—although they are barristers—simply do not stand up to scrutiny.
 The Bar will say that the legal services ombudsman gives it a clean bill of health, but if we dig a little deeper into the ombudsman’s 2005-06 annual report, we can see that the picture is not quite as black and white as the Bar would like us to believe. On page 48, we see that the Bar Council dealt with 560 complaints and that 183 complainants were unhappy with how their complaint had been handled. That is almost a third of all those who took their complaint to the Bar hoping that it would be dealt with in a consumer-focused way, went away disappointed and had to go to the legal services ombudsman to have their case dealt with.
At the same time, the Law Society handled 18,299 complaints, a huge number. However, just under 10 per cent. of all complaints against solicitors went to the legal services ombudsman for review. That does not in any way suggest that the Law Society is doing a magnificent job. It is appalling to have 18,000 complaints. But if we are to argue that the Bar is better and more professional in dealing with complaints than the Law Society, let us ensure that we are arguing about the same issues and that we look at the figures objectively.
 From the data, we see that the legal services ombudsman considered 3.9 per cent. of complaints about barristers to have been dealt with unsatisfactorily, compared with 3.1 per cent. of complaints about solicitors. There is next to no difference. There is no indication that the Bar is qualitatively and substantially better at handling complaints than solicitors; in fact, those figures suggest that it is the other way around.
The clause must be removed. It will absolutely and completely undermine not just the Bill but consumers’ confidence in the Bill and the legal profession. It is the one thing that, above all the other issues, consumers have raised with us throughout: delegation is a no-no, and I agree with them in that.

David Kidney: Does my hon. Friend agree that logic does not support an OLC that handles complaints only about some and not all lawyers?

Bridget Prentice: My hon. Friend is absolutely right, and he reminds me of another part of the Bar’s detailed briefing. The Bar complains about the fact that a number of Law Society staff—the LCS staff—might well transfer to the OLC, and it says that the OLC will be a rebadged LCS. Quite frankly, if we left the Bar’s complaints system out of the OLC, it would have a point. If the OLC dealt only with complaints about solicitors, we might as well have simply rebadged the LCS, and that is most certainly not our intention.
All of the consumer bodies—Which?, the National Consumer Council, and citizens advice bureaux—have made it absolutely clear that they do not accept or support delegation of complaints handling to approved regulators. Anyone who seeks to represent the views of consumers, rather than the self-interest of the Bar Council, would share that view, and for that reason and for the other reasons that I have given on Second Reading and that have been given in the other place, I urge the Committee not to support the proposed clause.

Henry Bellingham: It is a pleasure to be with you again this afternoon, Sir Nicholas. We had quite a degree of consensus this morning, and there was a great deal of good will on both sides, but I am afraid that that good will is now looking a little less solid. However, the Minister has done very well in this Committee, and I am sure that she will be promoted in the reshuffle. I am sure that her existing Parliamentary Private Secretary will be promoted as well, so if she is looking for a new one I can recommend the hon. Member for Grantham and Stamford (Mr. Davies), who might well be looking for early preferment in the new Administration.

Nicholas Winterton: Order. I have to say to the hon. Gentleman who leads for the Opposition that I made a plea—indeed, stronger than that, a request—that no mention be made of extraneous matters that have occurred this day.

Henry Bellingham: I must apologise; I must have been doodling on my note pad when you issued that stricture at the start of the sitting, Sir Nicholas.
I declare an interest, because although I do not practise, I am a barrister. So far, however, there have been not—touch wood—been any complaints against me or anyone who has instructed me.
There was a wide-ranging debate in the other place, both at Grand Committee stage and indeed on Report. When the vote took place on delegated complaints handling, there was a substantial majority in favour of the Lords amendment; it had significant all-party support. There are many people in the other place who are not linked to the legal profession and who know a great deal about the subject. For many years, the Bar combined the representative functions of the Bar Council with the regulatory function. Although it did a good job, as indeed the Law Society did with its complaints procedure, everyone realised that both mechanisms could be improved.
That is what Clementi was all about; it made clear that there could be improvement. That is why the Bar Council responded pragmatically and imaginatively by setting up the Bar Standards Board in January 2006. That is an independent, ring-fenced regulator, chaired by Ruth Evans, the former CEO of the National Consumer Council. The Minister mentioned that Which? and the NCC and other organisations were against the Lords amendments, but she did not mention that.
Furthermore, the Bar Standards Board has a consumer panel, chaired by Dr. Diane Hayter, who sits as a board member of the NCC.
The key objective of the Bar Standards Board is to protect consumers, which is why it puts a lot of emphasis on its lay membership. The Bar Standards Board complaints committee has 10 lay members who have a veto. Every complaint to the board has to go to its independent complaints commissioner, Robert Behrens, who is a non-lawyer.
The Minister said that she was concerned about a regulatory system that allowed lawyers to judge their own, but that is simply not the case. It is a ring-fenced organisation in which lay members predominate. The system that the Bar Council put in place—the Bar Standards Board—relies on lay members and members of the profession, barristers and QCs, who provide their services on a pro bono basis. It is extremely cost-effective and the result is that it costs about £640 to deal with the average complaint, which compares with more than £1,000 under the new unified system. I will come to the costs in a moment.
We should consider what the board has endeavoured to do by putting in place a system of excellence. It is not just about handling complaints; it puts a great deal of focus on issues such as education, training and qualifications and on accountability, transparency and consultation.
In the board’s annual report for 2006, its chairman says:
“Within a little over twelve months from Sir David Clementi’s recommendation...the Bar Standards Board was able to hold its first meeting on 26 January 2006. I believe this rapid pace is just one of many examples of the profession’s willingness to adopt new ideas whilst making sure that the best of what has gone before is retained. This is an ethos that we in the Bar Standards Board share and it underpins all that we do.”
The organisation has built critical mass and it is doing an excellent job. It was told to get on and set up an independent regulator, which is exactly what it did, and now it is threatened with having the rug pulled from under it and being wiped out. That is why many of their lordships found that the Bill needed improving and proposed their amendments; they are very concerned and angry that the Government are going to remove them.
The Committee should consider not just what Conservative Members say, but also the third party endorsement of the BSB. In her report for 2006-07, Zahida Manzoor, the legal services ombudsman, commended the BSB for its very strong performance. When we consider some of the figures that the Minister bandied around, it is interesting to note that Zahida Manzoor said that she was satisfied that out of the 166 cases referred to her, 84 per cent. had been handled properly. The adverse figure was only 16 per cent., which compares with the Law Society figures that showed a 29 per cent. adverse figure.
We can look at the relative figures until the cows come home, but the bottom line is that the new organisation is delivering. Zahida Manzoor said that
“the Bar Standards Board continue to deliver good turnaround times... for closing cases in 4-6 months”.
She said that the BSB is to be commended on appointing a non-lawyer, Ruth Evans, to be its chair. Zahida Manzoor has made it clear time and again that she thinks this is an excellent Bill, although she said that the Bill was designed for the OLC to be a single point of entry for all legal complaints, handling all redress complaints consistently regardless, of the type of lawyer complained about. In some ways, that backs up what the Government are trying to do. However, she says on page 22 of her report:
“The recent track record of the Bar Council, which is the second largest handler of legal complaints, has shown that it deals with those complaints more effectively than the Law Society. There is therefore empathy for those professional bodies that may feel that the handling of complaints by the proposed OLC in the West Midlands may be poorer than the current system they employ.”
That is substantial third-party endorsement, and the Government should listen to it carefully.

John Mann: Will the hon. Gentleman give way on that point?

Henry Bellingham: I was trying to be brief. I want to talk about safeguards. The Minister seemed to imply that, as it stands, the Bill will have no safeguards. That is not the case. As presently drafted, the LSB has the power to make a direction allowing an approved regulator, such as the Bar Council, to determine such complaints as may be specified in a direction.
When deciding whether to make a direction, the LSB is bound to act compatibly with the regulatory objectives and other regulatory principles in the Bill. In other words, safeguards are built into it. It is just a matter of one size does not fit all. That point was clearly made by the Law Society. It does not want the LSB to delegate service complaints to it. It wants them to go to the successor to the Law Society’s legal complaint service, the OLC. That is manifestly clear.
The Law Society has made it clear that, by definition, many more complaints will be made against solicitors. In fact, the Minister mentioned 17,000 to 18,000 complaints against solicitors and roughly about 600 against barristers, which is obviously a reflection of the respective sizes of the two branches of the profession. We should remember that barristers are at the sharp end of presenting cases in court. They are instructed to perform the advocacy role.
When we debated clause 133 this morning, we discussed cases going badly wrong, particularly family law cases. I quoted from Baroness Butler-Sloss at some length. People lose their cases; they lose their liberty; they lose their children and families, and they end up being extremely angry because they believe that they were in the right. Of course, they will complain against their advocate.
Some branches of the law will, of course, attract a disproportionate number of complaints. Indeed, my hon. Friend the Member for Bromley and Chislehurst made the point clearly and effectively that young barristers will do their best in court, but lose the case and a complaint will be made against them. Over years, the Bar Council has done well. It recognised a need for improvement, as did the Law Society. We now have a wholly improved system. However, if we consider the amount of effort and work that has been put into such matters and how it has resulted a really excellent body, why throw it away at this stage?
I wish to make two further points. There will be an explosion in work for the OLC if the alternative business structures system takes off in the way in which many people consider it will. My hon. Friend the Member for Huntingdon is convinced of that, and he is an expert on such issues. He dealt with this part of the Bill for the official Opposition and believes that there will be a far bigger increase in the number of new operations under the ABS system, which undoubtedly will lead to more complaints being made against the profession.
While the OLC is busy dealing with complaints from the new operators, surely it will make great sense to allow the existing system under the Bar Standards Board to stay in place. It will provide flexibility. As I said, it is a matter of one size not fitting all. I accept the point about value for money, and I have looked carefully at the figures that the Government have come up with. Let us consider what the Under-Secretary of State for Justice, the hon. and learned Member for Redcar (Vera Baird), said on Second Reading. She stated that the professionals were getting a bargain because, when the new regime was brought in,
“it will cost less overall than the existing system.”—[Official Report, 4 June 2007; Vol. 461, c. 98.]
 We have heard, however, that PricewaterhouseCoopers’ forecast for the transition costs of the OLC has been raised from £26.8 million to £32.1 million. We have also heard that the forecast of the annual running costs of the OLC have been raised from £16.8 million to £19.9 million. Let us look at what happened to the Financial Ombudsman Service, which is based on a similar model to the OLC. When the chief ombudsman gave evidence to a Joint Committee, he made it clear that he had experienced a very substantial increase in workload. In the first five years of operation, his workload had quadrupled and staff numbers trebled.
I do not see how Ministers can come to Parliament and say that there is going to be a reduction in the running costs of the new system when we know that there is going to be a big increase in the number of complaints. We know that the number of alternative business structures will increase the amount of legal activity in many areas.
If the Government have their way, they will wipe out a system that has worked extremely well. The system has been given third party endorsement by many different organisations.
I will conclude by quoting from Lord Borrie, who speaks from the Government Benches. He said that the Bar Standards Board has done an excellent job. He particularly focused on the pro bono work that was done by both the lay members and the QCs who gave their time on a pro bono basis. He pointed out that that was one of the key advantages that the Bar Standards Board had. He congratulated the board on its complaints handling mechanisms. He said that it would be a great pity if such mechanisms were lost to the Bill. 
I ask the Minister to reflect again on the matter. I know that she feels very strongly about this. The Law Society is neutral. An organisation that is made up of decent honourable people—people who have listened to what the Government have said and heeded their strictures and listened to what Clementi had to say—has gone away and done exactly what the Government have asked them to do. The Government cannot then turn around and effectively say, “What you have done is not enough. We are going to emasculate you and bring in amendments that will result in your organisation losing critical mass.” All the good work that has been done, all the investment, effort and training the Government have put money into is basically going to be wiped out. Therefore, I will ask the Minister to think again. That is why the Opposition cannot accept the amendments and we will be voting against them.

John Mann: I want to talk about climate change. That is not off the point because I mean a change of climate. That is the key point behind the Government amendment. It is why I wholeheartedly endorse it and wish to speak in favour of it. What is needed is a change of climate in how barristers see and perform their role. There is a certain irony in this strongest of closed shops, with the mentality of a closed shop—a mentality that I fully understand—attempting to defend its privilege against outsiders. There are other professions that have done that temporarily over recent years. They have attempted to fight for their privileged position and exclude all outsiders.
The hon. Member for North-West Norfolk, who has thrown even further back the principles of debate within the House, has eloquently advocated on behalf of his own closed shop. I congratulate him on the way he puts his case. However, the climate must change, and let me illustrate why. There is an idea that this particular closed shop can look after itself and the rest of the world need not bother. I recall they used to say that on Fleet street, and in other professions as well, with equal eloquence, vehemence of argument and self-belief. It was not an idea that stacked up when one looked from the outside. I will give two reasons why. They are unusual ones, but they are real cases. The first relates to the way in which barristers are complicit, including with solicitors, in providing opinions to legal executives carrying out the work of solicitors and giving a professional veneer to a case being put forward to a solicitor.
I raised that point in the Committee either last week or the week before and wrote to the Bar Standards Board, which of course said, “Not our business. We don’t accept complaints about that. That’s one for the solicitors.” In today’s strange climate, let me be the one to vehemently defend the Law Society and its systems against the unprincipled and inaccurate attacks on it.
The whole point about why the Law Society is getting so many more cases is not that there has been an enormous change in the performance of solicitors. There is a particular problem that has led to a particular kind of case coming in larger volumes than one would normally expect. The Law Society has made itself more outward-looking, open and accessible to complainants.
We now have an incredible situation whereby I wish duly to hold to account some of the barristers who have been complicit in doing over my constituents, but the Bar Standards Board says that I can do that only through the Law Society—by attacking and seeking remedy from the solicitor. The solicitor who has allowed the legal executive to take the case when they are not competent to do so is clearly complicit. The solicitor has then got the barrister to give an opinion so that the case can go forward and has fed that opinion back without consulting my constituents. There is clearly a fault in the system but there is equally a fault with the barrister who has been complicit in hoodwinking my constituents.
One way or another, I shall take that case forward. It is absolutely not the case that it is merely the solicitor who should be held at fault; the barrister should as well. Indeed, consider legal executive versus barrister—there is a certain hierarchy there. If anything, the balance should be the other way. The whole point is ensuring that there is equivalence in the system. If there is bias either way it should not be against the poor, downtrodden solicitors, whom I have been happy to attack when they have deserved attacking but whom we should not over-attack.

Simon Hughes: The hon. Gentleman is right that if a member of the Bar is at fault they should be subject to a complaint. If that complaint is justified, it should be upheld. From all the cases that he has dealt with as an MP, has he been party to complaints against members of the Bar? If so, how many of them have been upheld and how many not, and how does that compare with what we have heard from him about solicitors?

John Mann: At the moment one has to make a tactical decision on where to take a complaint. The Law Society is more accessible, but the financial penalties are greater. If I want financial compensation for my constituent at an appropriate amount, there is clearly a bias in the system meaning that one has to make a complaint against the solicitor. The case will be won only if the solicitor is at fault, so it is not as though one were trying to bring an undue case.
In a number of the cases, which tend to be the more complex ones and those in which the potential compensation is higher if the arguments of my constituent and myself are upheld, the amounts of money and the scandal are much bigger. I allege that my constituents have been ripped off. There have been many cases with the Law Society, and some have been won, so that is not a vague allegation. The Law Society has upheld some complaints, but the barrister complicit gets off scot-free.
My second example is the case of Hobson and others v. AMS and others, in which 65 miners were wrongly advised on a number of issues but fundamentally on how to take forward a group litigation order. The key advice in the documents presented to me was the barrister’s opinion. The barrister said, “This can be done, this is the way to do it.” The judge disagreed and said that that was not the way to do it, throwing the case out of court, from which all sorts of problems emanated. The detailed case against the solicitor was won through the Law Society; compensation was paid out, so that none of those people lost out financially, which was right and proper. However, it was left to the solicitor found negligent in the case then to take action against the barrister.
In the context of access to justice and of regulation, it should be equally easy to take a case against a barrister. More importantly, it ought to be easy to take a joint case. Why should my constituent, Mrs. X the textile worker, who I allege has been badly advised and treated, have to determine whether it is solicitor or barrister? It may well be—my advice to her in some of those cases—that it is both. Therefore, a joint case ought to be possible. Frankly, that would lead to complications—if there is an adjudication in her favour, who should pay out? However, the principles of the system are self-evident to me. Therefore, this classic closed-shop response needs knocking back. It is absolutely fundamental to access to justice that it is knocked back.
I studied the discussions in the House of Lords with interest and—given my inside knowledge of some of the solicitors and barristers employed by some of those who were attempting to get justice—with incredulity; absolute incredulity at the way in which the case was put, because the case is so weak, so poor, that it can barely be put. The case is one that I used to put to certain employers many years ago. “Look, we have got these jobs, we are the skilled workers, and we think that just us should have these jobs and everyone else can get lost, because we are looking after ourselves.” In essence, that is the case. There is an honour in that, but it is an outdated honour, an honour of past generations and traditions, and one that no closed shop should be allowed to maintain today.

Simon Hughes: The hon. Gentleman has not yet dealt with the case—let us imagine—of somebody making a complaint about the service, which included solicitors and barristers, through the one door of entry. It is checked originally by the overarching regulatory authority, the view of which is that the fault is entirely that of the Bar; the solicitors were not at fault. Is there not a case in that example? What if the regulator thinks that it is appropriate for a body dealing with Bar complaints to be passed that case, having gone through the process that assesses whether it is all one department’s fault, as it were, or another department’s?

John Mann: I will have to consider what the hon. Gentleman had to say. However, I have another example, where it is possible to attempt some remedy. That is with the Crown Prosecution Service. I find that if my constituents have a complaint—they have lots if they lost their case—the easiest target in the legal profession is the Crown Prosecution Service. People want to have a go at the police, the judge, the decisions made, the advocacy and the rest, but there is that one isolated example, which stands out and which we—certainly as politicians—can hold to account with relative ease.
 In conclusion, I restate my first point. The critical reason why this Government proposal will be so important is that it will change the climate. If the barrister giving the opinion has to think through the consequences if his opinion is not good, far more thought will be given to the case than is given at present. I base that on the many cases that I have reviewed. In some instances, the answer will be, “Actually, I have nothing additional to contribute. I have no knowledge about the matter. My opinion is valueless, and therefore I will not cover up what you are doing to strengthen your case purely because you are trying to do it on the cheap as a solicitors firm.” That would be a good thing for the legal profession as well as for the consumer. Therefore, I strongly support the amendment.

John Hemming: One of the difficulties with the issue rests in the complication of determining where something has gone wrong. As hon. Members may be aware, I am concerned about miscarriages of justice in the criminal courts relating to medical evidence and medical expert witness evidence. In cases such as those of Sally Clark and Angela Cannings, the defendants were initially convicted but at a later stage were proven innocent. The proof rested in the medical evidence; the cases involved arguments about it.
A question then arises if a complaint is made about the solicitor or the barrister. Were they at fault in the initial stage? A recent case in Mold of shaken baby syndrome looks on the surface to be a miscarriage of justice. The solicitors may have taken the view that it was in the best interests of their client to try to negotiate the best deal that they could get as they would not be able to beat the medical evidence from the doctors, the difficulty being that medical evidence from doctors is conflicted. They make a lot of money out of it and it ends up being wrong much of the time, and a complicated situation develops.
The question that we have to ask about all of this, and I include the patent agents and trade mark attorneys, is that much as there is great merit in having a single point of entry for complaints—if someone has a complaint, they go there—is there not merit in giving a permissive power to the Legal Services Board?

Kevan Jones: Does the hon. Gentleman agree that it is also important that the body that deals with the complaint is seen to be totally independent of the profession? Referring a complaint to the Bar Council would give the impression, possibly quite rightly, that the barristers were looking after the barristers.

John Hemming: The hon. Gentleman makes a valid point. Whatever system the Legal Services Board uses for managing complaints, it must be seen to be adequate to manage complaints. The point about clause 143 is that it gives a permissive power to the Legal Services Board to delegate cases; for example, if someone has a complaint about patents, which are a complicated area. It may be that over time decisions will be made to do things differently. Without legislation empowering the Legal Services Board to devolve decision-making, it will have no power to do so—it will have to operate in accordance with statute.
There is a reasonable case for the Legal Services Board to be allowed to operate things in the way that it sees fit. There is not inherently injustice in having a process whereby there is an initial consideration—in this instance, the Bar complaints process—followed by a subsequent response at some other point. Without that power, the board cannot say, “You have a look at this and see if you can resolve it. Failing that, we will move to another process.” It does not have the permissive power.
When the Bill becomes an Act and starts being implemented, there will be a process whereby it will come into operation. To say that on day one, we have to move immediately to everything being in one big organisation—including the patent agents and trademark attorneys, about whom we have seen no figures relating to complaints—seems overly inflexible. A more flexible approach allowing some discretion to rest with the Legal Services Board—

Kevan Jones: Does the hon. Gentleman have any evidence or any figures about how many cases we are dealing with? As I understand it, for the types of case that he is talking about—patents and so on—there are a very small number of complaints a year.

John Hemming: I accept the point. A very small number of complaints may be made about patent agents every year, and they may be handled very cost-effectively by the patent agents. It may seem that allowing the current complaints process to continue for a certain period rests with a body that is not necessarily seen to be inherently independent and would therefore have to involve a process of appeal to the legal services ombudsman, for instance, for a determination.
But we should not say at the start, “I’m sorry, we’re going to have to shove it all into one big organisation—trademarks, patents, barristers, solicitors and trade unions. Obviously, complaints about trade unions must be handled in exactly the same way, because there might be complaints about advice offered by regulated persons within the trade unions. We accept the point about the amendment—union conveners will not be regulated by the measures, and rightly so, because industrial relations should not be regulated by the Legal Services Board. But we are saying that any complaints about trade unions cannot be handled by the trades union complaint process. It must be handled with a one-size-fits-all approach. Everything goes—patents, trade unions, trademarks, barristers and solicitors.”
Clause 143 does not say that for forever and a day, the Bar Council should handle complaints about the Bar, but it gives the Legal Services Board a permissive power to say if it sees fit, “Complaints about trade unions will go through the trade unions’ process, and complaints about barristers will go through the barristers’ process.” The clause gives the Legal Services Board that option if it sees fit. It is not a requirement; it is permissive. To that extent, it is a good clause.

Kevan Jones: I rise to support the Government, returning to something that the Minister has stressed on numerous occasions—the rights of the consumer. I am sorry, but I do not accept the idea, which was supported by a rather confused argument from the hon. Member for Birmingham, Yardley, that people who want to make complaints are quite clear about whom to complain to and how to deal with their complaints. A one-stop shop for all complaints is certainly the right approach.

John Hemming: I agree that the one-stop shop is a good mechanism for handling the initial complaint, but would the hon. Gentleman say that that should preclude delegating the handling of the complaint process, so that the complaint might be received at a certain place but the handling occurs in different ways?

Kevan Jones: Yes, I would. The system must be seen to be independent from the organisations about which people are complaining. That is fundamental as well. Anything that smacks of people addressing complaints themselves will take us back to when, for example, the police investigated the police. It is the same principle here.
 I shall give an example of a case of mine that, strangely enough, did not involve miners’ compensation. It was a divorce case in which I heard a complaint about a solicitor, and it demonstrates why it is important to have a one-stop shop. Mrs. D came to see me with quite a simple divorce case—no children or dependents were involved. She had gone to a local firm of solicitors who for some reason—I could not quite work out why—employed two barristers to deal with the case. Even with my layman’s knowledge, I would not have thought that it was a complex case. The first question that should have been asked was whether barristers needed to be instructed in that case, and I would have contended that they did not.
Not only did it take about five months to settle the case, she then had a problem with the solicitors about the release of monies in the divorce settlement. The problem was that the solicitors were complaining that they could not finalise the case because the barristers had not submitted their fees. Again, I asked the legal services complaints service to intervene, and it did a sterling job of putting pressure on the solicitor and raising questions. The poor woman was happy to have the case moved on to its final point, as she had no other means of support.
I wanted the case to be taken right through, but the solicitor offered Mrs. D compensation for the poor service that she had received and she was happy with that. I then wanted to go after the barristers, but she was reluctant to go any further. In that case, solicitors and barristers were clearly acting in cahoots. I do not know what the circumstances were or why the barristers were instructed in the case, but if there had been a one-stop shop that dealt with the problem as a whole, that would have given the case strength and made it easier to deal with.
My hon. Friend the Member for Bassetlaw made his point eloquently. Having also been a trade union official, I remember the arguments that I used to make on occasions—on why, for example, boilermakers in the shipyard should only do certain jobs and why shipwrights should only do others. Yes, it was an archaic age; perhaps there were reasons why such practices should have been supported in that dim and distant past, but we cannot support them any longer. The idea of making the complaints system simple and easy for people to take things forward is an important part of the Bill.
The complaints system should have credibility. Since the Law Society separated from it, people have had more confidence in its complaints system, which is seen to be independent of the legal profession. I would oppose totally anything that smacked of complaints being put back to the profession, as that would undermine the credibility of what the Bill proposes.
The hon. Member for Birmingham, Yardley seems to think that there should be a transition phase. I am sorry, but that is a clear attempt to keep control over the regulation of the Bar. If the amendment were not agreed to, I do not think that, given time, the Bar Council would wake up one morning, see a blinding flash of light and say, “We should now give things up.” No trade organisation, trade union or self-interested body ever gives up anything willingly, so that would not happen.
Arguments have been made that there will be a big bang that will swamp the system early on. There has been an argument about patent agents. I do not think that there are more than five complaints about patent agents in any one year, so I do not think that the system will be swamped. For those reasons, it is important that the amendments are agreed to. I say to the Minister that when the Bill goes back to the other place, we need to resist strongly any attempts to reintroduce this restrictive practice.

Bob Neill: It is good to see you back, Sir Nicholas. Had you been here this morning, you would have heard me remind Committee members of my interest as a member of the Bar—although not currently practising, which is important to what we are discussing.
 I was once the subject of a complaint to the Bar Council. It arose when I was defending someone in Chelmsford Crown court who was acquitted because the jury concluded that the prosecution witness was not credible. That witness complained about me to the Bar Council because I had obtained an acquittal for my client. He also complained that the prosecuting counsel had not gone hard enough. That shows why we should be careful about the nature of complaints against members of the Bar. Although it was manifestly obvious to me, as a young barrister in those days, that what was being said was nonsense, my head of chambers and I none the less thought it right and proper to make everything available to the Bar Council. We got all the papers back from the Crown Prosecution Service, which had instructed me; we got the notes from the court clerk; I liaised with the defence barrister; and he got out all his notes and his instructions from his solicitors. We made all that documentation available, which took a certain amount of time and concern, and presented it, and in due course it was dealt with and the complaint was dismissed. Even though I knew in my heart of hearts that I had done no wrong, and my colleague on the other side knew in his heart of hearts that he had done no wrong, for a young member of the profession, it was a pretty unpleasant experience.
I have no doubt become rather tougher as time has gone on, but over the years many young colleagues have come to me and said, “I have had this complaint made against me,” and they have not dismissed it, treated it lightly or thought that it was something to be laughed off. It causes them concern, even when in the vast majority of cases, I am glad to say, nothing comes of it. The idea that the Bar wants to keep a closed shop because it wants to protect its own and it does not take the issue seriously is just not justified on the evidence.

Kevan Jones: The hon. Gentleman just said that in most cases, nothing comes of the issue. Is that not because barristers investigate barristers?

Bob Neill: No, and I shall come on to that point now, which unfortunately represents the certain measure of cynicism that creeps in, and demonstrates that the hon. Gentleman did not perhaps listen properly to my point this morning. The nature of the complaint arises because of the nature of the jobs that the Bar does, as opposed to the nature of the job that the solicitor does. I am not setting the Law Society against the Bar Council; the simple fact is that the Bar is a smaller, reference profession, which does not handle clients’ money, for example. As I said this morning and as is well documented, the vast bulk of the complaints made against barristers relate not to the advice given in such claims as miners’ compensation, when things clearly went badly wrong, but to family work, which was referred to, and to criminal work.

John Mann: That is surely no surprise to the hon. Gentleman, because the Bar Council refuses to accept such complaints.

Bob Neill: No, with respect the hon. Gentleman is wrong and misses the point. My point, which the Minister accepted, was that the particular vulnerability to complaint of criminal and family work is due to the pressure that the client is very often under. I found that family work was the most stressful element of any legal practice that I ever undertook. It was stressful for the lawyers and for the clients, even when they were in the wrong, as the judge found them to be, because people believe passionately, if sometimes misguidedly, in the rightness of their situation.
 Against that background of profound disappointment, when people lose something that is precious to them, a complaint will be made that is not necessarily susceptible to reason or conciliation. For the same reason, the professional criminal who has got his or her 15 years or more is more than capable of turning on those who advised him and making complaints against them, as he will against the police, the judge and the prison officers who deal with his welfare. The professional criminals are not shrinking violets, and that is a very different situation from the one that is posited.

John Mann: How many family complaints were there against the hon. Gentleman’s good self in that context?

Bob Neill: In my 25 years, there were two, and the result was the same. Most criminal practitioners find that that sort of thing can happen to them. It is interesting that the most famous negligence case against a barrister, Rondel v. Worsley, was brought against one of the most eminent and impeccably correct Queen’s counsel that one has ever come across. If anyone thinks that there was anything improper about Michael Worsley, they know nothing of him or the Bar. Even the most eminent and successful people can be the subject of unfair complaint in the world in which we have to operate.

John Mann: So there are all these greatly emotional family cases—I am paraphrasing—that have lost out and these various criminals who either went to jail when they should not have done or did not go to jail when they should have done. Yet, in those 25 years there were only two complaints against Michael Worsley. Is the hon. Gentleman not defeating his own argument?

Bob Neill: Precisely not. I find it very difficult to see the logic of the hon. Gentleman’s case here. I am making my point in response to the Minister’s point. She said that about a third of complaints against the Bar were made where people were unhappy. In response, I would say that that is the nature of the people who tend to complain about the Bar. They are invariably less likely to be happy, because of those types of cases, and also because the type of complaints that they make are less likely to be subject to conciliation or to be dealt with by any other means. It is also worth bearing in mind that about 70 per cent. of complaints involving members of the Bar are hybrid cases, dealing with questions of both conduct and service, which the Government’s system is rather rigid in dealing with.
I would accept the point that was made about climate change, save for this: the Bar itself has recognised that the climate needs to change and the Bar has moved. If the Bar had stuck where it was, in the position that it was in at the beginning of my career, the point about climate change would be much stronger, but the Bar has not stuck there. It has separated out the Bar Standards Board; ring-fenced it; made it independent; put in its chair someone who themselves had a distinguished career in consumer protection; appointed as its independent reviewer, who looks at every complaint, someone who was previously the secretary to the Committee on Standards in Public Life; and given its lay panel a veto. The Bar has taken all those steps to establish that separation of the Bar Standards Board. That is the big difference.

Kevan Jones: Is it not the case that, a little bit like the Law Society, the Bar knew that this Bill was coming its way and what the hon. Gentleman is describing is the Bar trying to duck under the wire and protect its interests? I would also like to ask the hon. Gentleman how he would address the point that the public’s perception of barristers investigating barristers is not something that the Bar can get away from.

Bob Neill: That perception, it seems to me, was sensibly dealt with by the hon. Member for Birmingham, Yardley, when he said that there is the Legal Services Board, which is the one-stop shop. The Lords propose to give a permissive power whereby if, and only if, the board is satisfied that a particular regulatory structure meets its required standard for protecting the consumer, then it can delegate; it does not have to delegate, but it can do so. That seems to me to be the key thing here.
Reference was briefly made to the patents and trade mark situation. There is some evidence regarding that situation. My understanding is that the Chartered Institute of Patent Attorneys has had 16 complaints in five years. That is 0.00128 complaints per member, which is a tiny amount. The trade mark body, the Institute of Trade Mark Attorneys, has had three consumer complaints in the last six years, all settled by conciliation. These are small bodies. The legal services ombudsman said of CIPA:
“I am satisfied that CIPA has in place sufficient systems for handling complaints that are fit for that purpose and appropriate for the size of its operations.”
They are small, specialist bodies that already have robust systems in place, approved by the legal services ombudsman, but under the Government’s current unduly rigid proposals they would be swept up disproportionately—to use one of the Minister’s favourite words—into an overly rigid regime, and that is wrong.

John Hemming: I think that the hon. Gentleman makes the point—if it ain’t broke, don’t fix it.

Bridget Prentice: If it ain’t broke, don’t fix it, but the problem is, of course, that the system is broke and it needs to be fixed.

John Hemming: Can the Minister say why these bodies dealing with patents and trade marks are broken?

Bridget Prentice: I will go through the debate and I will say to the hon. Gentleman that, although the trade mark attorneys, the patent attorneys, the Bar Standards Board and the Legal Complaints Service for the Law Society are all—particularly the latter two—doing an awful lot better at the moment than they did in the past, that is not a reason for saying that we should have anything other than an independent office for legal complaints to which the consumer can go to have their complaint and claim for redress dealt with.
I have listened carefully to what hon. Members have said, and although I have heard all the arguments in the other place, it was good to hear them reiterated here. It was even better, however, finally to hear in the debate the voice of the consumer, and to hear it in this House, because quite clearly the other House was not listening. As I have said, the consumer organisations have told us in no uncertain terms that clause 143 must not stand part of the Bill. Allowing delegation would fly in the face of the reforms that we have sought since Sir David Clementi published his report in December 2004. Neither he nor the consumer organisations, nor the Government, have ever believed that it is acceptable to allow the present system to continue in any of its forms. 
On the issues raised by the Liberal Democrat Members, it is entirely possible, for example, for an assistant ombudsman to be a barrister—as long as he or she does not hold a practising certificate. My hon. Friends the Members for Bassetlaw and for North Durham were not too happy about that idea in earlier debates, but that will be the position. The Office for Legal Complaints can request advice or assistance under schedule 15, paragraph 15, from any body or person, and they can get expertise if that is what they need. Providing that such advice or assistance is given in that way will ensure that the OLC remains visibly independent and that complaints handling will restore the consumer confidence that has been absolutely shattered during the past few years.
Before setting out some of the comments of consumer bodies, I shall pick up on the point that was made by the hon. Member for Bromley and Chislehurst. As a barrister, he made a very compelling case for barristers to carry on looking after themselves, but he seemed to have forgotten that more than 2,000 solicitors have rights of audience in the Crown court, yet have not asked for delegation. In fact, the Law Society has said that, if we offered them delegation, they would not accept it. He made a compelling case too about family law and about the difficulties and stresses of dealing with it. Do not solicitors deal with it too, however, as well as with immigration cases, and other hugely emotive issues? Are those issues not likely also to result in similar feelings? Again, however, the Law Society is not asking for delegation.
The hon. Member for North-West Norfolk talked about the legal services complaints commissioner and the legal services ombudsman, who performs a very important function under the current system, and whose work I very much value. I am in regular discussion with her, and I welcome her support of the reforms. I am aware of the issues that she has raised in her report, but as I said in my opening remarks, consumers, the Government and I all think that delegating complaints handling would undermine the purpose of the Bill.
The hon. Gentleman also said that the Law Society was neutral. That is not strictly true, and it is misleading to suggest that the society agrees with the Bar that one size does not fit all. The Law Society supports the establishment of the OLC as a new body that is completely independent of all the professional bodies and that is responsible for dealing with all consumer complaints. The Solicitors Regulation Authority is firmly and absolutely against delegation and has argued strongly that the co-operation of the Bar and its inclusion in the new system are essential to the success of the new arrangements.
What have the consumers said? The CAB says:
“We consider it is essential that complaint handling and adjudication on issues of service quality should not be delegated in this way”—
that refers to the amendment in the other place—
“as this would undermine the role of the OLC as a comprehensive ombudsman service.”
The hon. Member for North-West Norfolk prayed in aid the fact that Ruth Evans was once the head of the NCC. She was excellent in that role, as she is in dealing with complaints for the Bar Council. Another Evans, Deborah Evans, is the chief executive of the complaints service for the Law Society. I do not know whether the name Evans automatically qualifies someone to deal with complaints about lawyers, but clearly there is something there. Both women are doing excellent jobs in dealing with complaints received about the legal profession. However, they take different views about delegation.
The NCC says that delegation of complaints—clause 143—is its
“top priority in the Bill.”
It says:
“The Bill was amended in the Lords—following repeated lobbying by the barristers profession—to allow the LSB to direct that an approved regulator may deal with complaints...Consumers will not trust a regulatory system that allows lawyers to judge their own. Independence is the single most critical principle in any redress system.”
Which?has also said:
“Consumers will not trust a regulatory system that allows lawyers to judge their own.”
It says that it takes a very similar view.
The three organisations together wrote to Baroness Ashton about this aspect of the Bill, saying the same thing:
“Separating the regulatory and representative functions of the professional bodies will be insufficient to command consumer confidence in this respect, especially given the relevant governance and complaint committees will continue to have professional majorities.”
I am sorry that Opposition Members have fallen hook, line and sinker for the vested interest of the closed shop of the Bar. The lone voice in the House of Lords speaking up for the consumer—apart, of course, from Baroness Ashton, who was leading for the Government on the Bill—was Lord Whitty. They were the only Members speaking on behalf of consumers.

Kevan Jones: With great humility, may I correct my hon. Friend? Lord Bach also spoke in favour of consumers.

Bridget Prentice: I was getting carried with the comments made by Lord Whitty in the other place. His description of what would happen if we allowed delegation to go ahead sent shivers through the barristers who were there. My hon. Friend is right to say that Lord Bach also backed the consumer view.
As the hon. Member for North-West Norfolk said, the legal services ombudsman rightly said that the arguments made by the Bar should not be dismissed without serious consideration. Sir David Clementi gave them serious consideration, and then he dismissed them. The Government gave them serious consideration, and then we dismissed them. We heard what was said to the Joint Committee and we gave that serious consideration, but we have dismissed it. The LSO should be in no doubt that we have given serious consideration to the arguments made by the Bar Council, but I agree with my hon. Friend the Member for North Durham. If the clause does not stand part of the Bill today and there is any attempt in the other place to reinstate it, we must and will resist it.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 7, Noes 10.

Question accordingly negatived.

Clause 144

Reporting misconduct

David Kidney: I beg to move amendment No. 276, in clause 144, page 76, line 17, leave out ‘may’ and insert ‘must’.

Nicholas Winterton: With this it will be convenient to discuss the following amendments:
No. 277, in clause 144, page 76, line 19, at end insert 
‘A copy of the report made to the ombudsman under this section must be sent to the complainant by the ombudsman.’.
No. 298, in clause 144, page 76, line 30, at end add—
‘(6) The ombudsman may, when so requested by a complainant, make a request to the relevant authorising body to review the decision it has made as set out in a report made under subsection (2), and may request the relevant authorising body to notify it of the result of any such review.’.

David Kidney: It is a pleasure to have you in charge of our proceedings again, Sir. Nicholas. This is about the procedure for a complainant to find out what happens after making a complaint. If I may start at the beginning of the process, a complainant who is dissatisfied with a service from a provider of legal services will first try to resolve their complaint with the legal server directly. If that fails, as we have just established with the last vote, there is only one place to go: the Office for Legal Complaints. Once there, the office can decide whether it is a complaint about the standard of service, the conduct of the professional who delivered the service, or partly one and partly the other.
To illustrate the points that I am about to make, let us take a situation where the ombudsman and Office for Legal Complaints consider that there is a mixed case of standards and conduct. The ombudsman will say to the complainant, “I think that there is possibly an element of poor standard of service here. I will investigate it and let you have my decision. However, I also think that there is possibly a problem with the conduct of the person who delivered the service to you and I shall refer that to an approved regulator”. The complainant might spot the difference between those two outcomes and say, “Just a minute. You have told me that I will hear about the result of the complaint about the standard of service, but I did not hear you say anything about what I will hear about the conduct”. The ombudsman will say, “That is quite right. Either I will not bother to deal with it and will ask for a report myself about how it is dealt with, or, even if I do take action, I do not have to tell you anything about it”.
As far as consumerism is concerned, that is a very unsatisfactory situation. As a matter of good standards of practice it ought to be the case that the ombudsman says, “I have decided that part of this matter is about standards. I will investigate it and let you have my decision. The other part is possibly about conduct. I am going to get somebody else to investigate that for you and I will let you know the outcome of that investigation too”. I do not think that any other outcome is satisfactory. However, at the moment, the way that clause 144 is drafted means that that is not the case.
First, the ombudsman does not even have to ask the approved regulator to let them know the outcome of an investigation because the Bill states that the ombudsman may request a report back, which means that they need not if they do not wish to. The clause is silent on the ombudsman telling the complainant the result.
Amendment No. 276 changes “may” to “must”, which means that the ombudsman must always ask for a report from the approved regulator. I was pleasantly surprised to receive recently from the legal services ombudsman a special report called, “Legal Services Reform—a perspective”, dated June 2007, in which my argument is echoed on page 26. It reads:
“The OLC rules must require a report from the Approved Regulators on every case that has been referred from the OLC for potential misconduct. The OLC could then use this information to build up a picture of any systemic problems in regulation”.
In addition to my argument that it must be best practice to let a person know the result of their complaint, the ombudsman has here given another very good reason—spotting systemic failure in the system and having that information every time.
 My amendment No. 277 would provide that when the ombudsman has insisted on receiving the report, he ought to pass it back to the complainant. That, again, is my argument about best practice. I then push the boat out a little bit with amendment No. 298. What would happen if a result from the approved regulator is that no action be taken, but the complainant, on hearing that from the ombudsman, says, “But that is outrageous! This is the worst case I have ever heard of. How on earth could that be the outcome?”? There is no remedy if that is the attitude of the complainant. There is the possibility, of course, that the Legal Services Board, a long time down the road, might pick up a lot of similar complaints and take some decisive action, but nothing could happen as a result of that one complainant thinking that the outcome was poor. I suggest that the complainant could say to the ombudsman, “Will you please go back to the approved regulator and ask it to reconsider the decision and have a fuller look at it?” There would be a filter because the ombudsman could say, “This is a very unreasonable person. I have been dealing with their complaint for a very long time. I really do not think that there is anything in this”, or they could say, “Well, actually, I was a bit surprised by the outcome and on this occasion I will ask for a report back”. Again, I think that I am supported by the same report from the legal services ombudsman. Page 25 states:
“There is no mechanism for the consumer to ask for a review of any of these decisions, as there is no longer the Legal Services Ombudsman independent review available to them”.
A little later on the same page it states:
“The proposed new OLC process will therefore represent to the consumer the loss of the independent Legal Services Ombudsman review as against the current scheme.”
In other words, if we legislate as the Bill is currently drafted, we will introduce a system that is actually worse for the consumer in that specific situation than the current system. I do not think that that is what the Minister intends or what the consumer groups outside this Room are expecting to hear and find at the end of our deliberations. If she does not like my proposal in the amendment, she ought to consider another way of ensuring that the ombudsman system is replaced by something at least equally as robust.

Henry Bellingham: We support amendments Nos. 276, 277 and 298. I congratulate the hon. Member for Stafford on the way in which he proposed them. In fact, I gather that they have the full support of Which? and the NCC. I congratulate Which? and the NCC on the excellent briefing that they gave the Committee and on the practical stance that they have taken. Obviously, the Opposition have been unable to support every one of their requests, but certainly we support the amendments. I had a lot to say on them, but he has made the case strongly already. All that I would like to do is endorse what he said and point out that it has the support of everyone in the Official Opposition.

John Hemming: The hon. Member for Stafford made an excellent point: for the measure to work properly, it must be driven by the consumer. Obviously, if the consumer does not know what is going on, they cannot drive anything and, therefore, we support wholeheartedly the three amendments.

Bridget Prentice: I was at first going to be very resistant to the amendments, but my hon. Friend has made a couple of very important points about the consumer knowing the end results and about how, having made the complaint, it is important in good practice for them to know the end result. I would therefore like to look at them again. I was initially resistant because my main concern is that the system should not be overly bureaucratic and costly. On that basis, I ask my hon. Friend not to press amendments Nos. 276 and 277.

David Kidney: Given that I have the advantage of everyone supporting me on this, I am obviously concerned that we should keep progress going forward. On the possible objection regarding costs, does my hon. Friend agree that if it is ingrained in the practices of everyone concerned, and they are already under duties to exchange information with each other, it need not be an additional cost?

Bridget Prentice: My hon. Friend makes a very good point. As everyone on the Committee knows, the parliamentary ombudsman always writes back to the relevant Member of Parliament and complainant when a complaint is made. I am sure that there is an efficient way in which these matters can be dealt with that is not too costly.
 I cannot accept Amendment No. 298, however. It is not the OLC’s role to ask an approved regulator to review disciplinary decisions. We have to make sure that the Bill sets out a clear distinction between redress, which is for the OLC to consider, and discipline, which is a matter for approved regulators. I accept that the Bill does not allow the board or complainants to challenge a regulator’s decision in an individual disciplinary case, but it does allow the OLC to build up a picture of how well regulators are dealing with disciplinary matters so that they can report any concerns to the board. I do not want to accept the amendment because it could blur some of those issues. Allowing the board to build up a picture of how well the disciplinary arrangements of each regulator is working is an acceptable way forward and the Bill provides the necessary safeguards to ensure that discipline is dealt with properly. I therefore ask my hon. Friend not to press the amendment for reasons quite different to those for the previous two.

David Kidney: As it is very much scratch drafting in amendment No. 298, I shall not want to press it to a vote until the wording has been improved. However, on the principle that there should be some ability to query why no action has been taken in a conduct case, for example, I should like the Minister to consider that we are losing the ombudsman’s role and that nothing is replacing it.

Bridget Prentice: I should have said in my closing remarks that although I can see that the legal services ombudsman makes a very good job application on page 25 of the special report, I believe that what we are putting in place is far more robust and far stronger, more independent and better for the consumer than the current system. That is the very reason why we are making the changes.

David Kidney: I am grateful to my hon. Friend for giving me that opinion. Perhaps I can pursue her between now and Report to examine it and satisfy myself that it is the case.
I am willing to withdraw amendment No. 276, because the Minister seems to have fully accepted the principle of what I have said, and there is more than one way to achieve the result that I want to achieve, so I await with relish the Minister’s amendment on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 144 ordered to stand part of the Bill.

Clauses 145 to 149 ordered to stand part of the Bill.

Clause 150

Enforcement of requirements to provide information or produce documentation

John Hemming: I beg to move amendment No. 236, in clause 150, page 80, line 4, leave out ‘a person (“the defaulter”)’ and insert ‘an authorised person’.
I rise merely to provide clarification, to ensure that the right person is dealt with.

Bridget Prentice: I am afraid that I cannot accept the amendment, as it would mean that the ombudsman would not be able to enforce requests for information or documents from complainants. That would be unacceptable because it could result in unequal treatment of the two parties in a case under the scheme. As it would mean that the ombudsman would be unable to follow up requirements for information from complainants, it could result in people wasting the ombudsman’s time. It might be of some reassurance to the hon. Gentleman that I expect the power to be used rarely, if at all. It is nevertheless important for it to be included in the Bill, to act as a deterrent and so that, in the interests of fairness, both parties are treated equally.

Simon Hughes: I am half-surprised that the Minister did not buy the amendment. She understands the argument. That she says that the measure will be rarely used is a consolation, but not a complete protection, which she also understands.
There is a difference between requiring disclosure and revelation of documents from organisations and requiring the same from the individual citizen. There is a general wish to protect the privacy of citizens’ information, which is why the amendment was tabled. That is the right starting point. We will consider the Minister’s concerns, but this is the sort of issue of principle on which we would want to be absolutely certain that we have guaranteed enough protection for the individual. We will return to it later if necessary. On that basis, I beg to ask leave to withdraw the amendment.

Nicholas Winterton: I must say to the hon. Gentleman that the hon. Member for Birmingham, Yardley, having moved the amendment, has to rise to withdraw it if he wishes to do so.

John Hemming: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 150 ordered to stand part of the Bill.

Clauses 151 to 157 ordered to stand part of the Bill.

Clause 158

Approved regulators not to make provision for redress

Amendment proposed: No. 14, in clause 158, page 83, line 11, leave out from ‘redress’ to end of line 13.—[Bridget Prentice.]

The Committee divided: Ayes 8, Noes 7.

Question accordingly agreed to.

Amendment agreed to.

Amendment made: No. 15, in clause 158, page 83, line 17, leave out ‘and except as permitted by subsection (1)’.—[Bridget Prentice.]

Clause 158, as amended, ordered to stand part of the Bill.

Clauses 159 to 172 ordered to stand part of the Bill.

Clause 173

Funding

Bridget Prentice: I beg to move amendment No. 16, in clause 173, page 91, line 25, after ‘Act’, insert ‘or any other enactment’.

Nicholas Winterton: With this we may discuss Government amendment No. 17.

Bridget Prentice: I will be very brief. These are simple amendments that are necessary to ensure that the board is not left with a shortfall of funding so that it can perform all its functions and carry out enactments transferred to it as a result of other amendments to the Bill. I hope that the Committee can accept the amendments.

Henry Bellingham: On the basis that my hon. Friend the Member for Huntingdon and myself will hopefully be running the Department in a year or so—hopefully not with the hon. Member for North Southwark and Bermondsey—I am glad that the Minister has moved the amendments, and we support them.

Stephen Hesford: On a point of order, Sir Nicholas. Is it not in order that comments to the Committee have a smidgeon of credibility, which cannot be said of the last comment?

Nicholas Winterton: I say to the hon. Gentleman that these matters are outside the scope of my responsibility. They have no relevance to this particular Public Bill.

Question put and agreed to.

Clause 173, as amended, ordered to stand part of the Bill.

Clause 174

The levy

Henry Bellingham: I beg to move amendment No. 301, in clause 174, page 92, line 6, at end insert—
‘( ) In apportioning or imposing a levy the Board shall have regard to—
(a) the extent to which any resulting increase in the regulatory fees of a Regulator will be reasonable and proportionate in comparison to the fees already levied on relevant regulated persons;
(b) the extent to which the levy might discourage entry to or retention in the regulated sector;
(c) the extent to which the number of persons regulated by a regulator might be reduced in consequence of the amount of the levy;
(d) the extent to which the regulator might be disadvantaged and another regulator might derive an advantage, in particular through the movement between regulators of regulated persons as a consequence of any differences in the levy imposed;
(e) the likely ability of the Regulator to raise the levy from Regulated Persons;
(f) the impact of the levy on the Regulator’s viability.’.

Nicholas Winterton: With this it will be convenient to discuss amendment
No. 302, in clause 175, page 93, line 13, at end insert—
‘( ) A debt recovered under subsection (5) may only be recovered from practising fees held by a regulator.’.

Henry Bellingham: I shall be very brief, because we are making substantial progress. The clause is on the levy, which is an important mechanism in how the board will run its affairs. The amendment would insert a new subsection setting out various factors to which the board must have regard when imposing a levy. It is basically a tidying-up exercise and would put various qualifications into the clause. It would improve the Bill, addressing in some detail a concern that a number of outside bodies have put to us. That is why it is important that the clause be amended as suggested, and I hope that the Minister will consider the amendment.
If the wording of the amendment is not up to scratch and the Minister can consider it and return to us on it, we will be more than happy to accept that. The amendment is probing, but it strikes me as a sensible way of improving an important clause. The same can be said for amendment No. 302, which would add to clause 175 the words:
“A debt recovered under subsection (5) may only be recovered from practising fees held by a regulator.”
That speaks for itself and would remove any semblance of doubt on the matter.

Bridget Prentice: I have listened carefully to both what the hon. Gentleman has said and what was said in the other place on the matter. I reiterate the point that my right hon. and noble Friend Baroness Ashton made. She highlighted the fact that the board would have to be satisfied that the apportionment of the levy was in accordance with fair principles before making levy rules. I am still of the strong opinion that that is the right way to go about it, rather than set out in the Bill a prescriptive list of factors as the amendment would.
To set such a list in primary legislation would restrict the board and preclude it from considering factors that might subsequently prove to be equally, or even more, important. I recognise that the list sets out, among other things, what the board should consider, but my concern is that any list would put pressure on the board to consider the matters on it above all else for fear of its decision being reviewed. That would restrict the flexibility that I have constantly said will be an important part of the board’s function.
I understand where the amendments come from and I have great sympathy with the views of the smaller legal organisations that want to ensure that they are not disproportionately burdened by the levy. They say that they do not want a one-size-fits-all approach to the matter, and I agree absolutely and wholeheartedly with them, which is why we need flexibility. The amendments would reduce that flexibility by predetermining some of the factors, which might be to the detriment of some of the smaller organisations that will be subject to the levy. On that basis, I ask the hon. Gentleman to withdraw amendment No. 301.
On amendment No. 302, for the record, I would in general expect money owed in respect of the levy to be paid from practice fee income, but I do not think that it is appropriate for the Bill to state that practice fees are the only source of funds by which debts to the board may be paid. Once again, that would restrict the flexibility of a regulator to meet a debt that might best be dealt with in a way that suits its own financial arrangements. On that basis, I do not support the amendment.
It is quite unusual for legislation to restrict the way in which moneys owed may be recovered. In effect, it would fetter the court’s ability to enforce payment of debts. The standard procedure for recovery of debts should apply, so I ask the hon. Gentleman to withdraw the amendment.

Henry Bellingham: The Minister has stressed the point about flexibility. I am glad that we gave the issue another airing—it was discussed in the other place, as she rightly said, but the proposals were rejected. I am glad that we have had another discussion. In the light of what the Minister said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Simon Hughes: I beg to move amendment No. 237, in clause 174, page 92, line 14, after ‘means’, insert ‘two-thirds of’.

Nicholas Winterton: With this it will be convenient to discuss the following amendments:
No. 238, in clause 174, page 92, line 16, leave out ‘including’ and insert ‘excluding’.
No. 239, in clause 174, page 92, line 17, leave out ‘and’ and insert ‘but including’.
No. 240, in clause 174, page 92, line 26, leave out ‘including’ and insert ‘excluding’.
No. 241, in clause 174, page 92, line 33, leave out ‘means’ and insert ‘excludes’.

Simon Hughes: The amendments are about the start-up and running costs of the board. They propose dealing with those matters differently so that the Government would meet a third of the running costs of the LSB, and would bear the start-up costs rather than transfer them to the legal profession.
The Joint Committee on the Draft Legal Services Bill supports the amendments. The Government intend that the cost of the regulatory regime, including the LSB—the umbrella organisation—should be borne by the legal profession. The amendment would split the responsibility. No body, and certainly not the Law Society, has argued that the professions should meet the costs of the lower tier of regulation, by which I mean the regulators and the office of legal complaints—that is the current position. The Law Society supports the status quo, as do we.
The supervisory tier is a different matter because its responsibilities are different. To ask the legal profession to meet its costs is not only unreasonable but illogical and inconsistent with other Government policies. Sir David Clementi’s report, to which we have referred often today, said:
“The issue arises as to how the LSB should be paid for. At present a substantial part of the oversight function is paid for by the State: judicial oversight falls to the taxpayer, as does the cost of the oversight function carried out by Government departments. The arguments in favour of the Government contributing to the cost of oversight functions, beyond the fact that it does already, are...that the LSB, in pursuit of its objectives...such as ‘access to justice’, has a wider role in the public interest than the oversight of practitioners in the legal sector”
—the LSB has a duty to the public as well as to the legal profession—and
“that an element of payment by other than the bodies being regulated confirms that the regulator is independent of the regulatee.”
That is an important principle We discussed that earlier in a different context.
Sir David Clementi went on:
“There is an interesting precedent in the proposed funding of the Financial Reporting Council. Its funding is to be split, two thirds falling to the private sector and one third to Government. How the split should be made between the private sector and Government for the LSB would need to be covered in statute and would, therefore, be the subject of Parliamentary scrutiny.”
He pointed out that the Government already meet a third of the cost of the Financial Reporting Council. I understand that they also meet the full cost of the supervisory tier of health care regulation, the Council for Healthcare Regulatory Excellence. They have not given a significant or convincing explanation of why they consider it appropriate for them to meet part of the supervisory tier of regulation in accountancy, but not in legal services.
 One function of the Legal Services Board is to consider what additional legal services should come within the regulatory net. That function is currently the Government’s function and does not form part of the regulation of legal services. It is carried out entirely in the public interest rather than in the interest of providers of legal services. It seems therefore particularly unreasonable for the Government to expect those costs to be borne by the legal profession. The Joint Committee considered the issue and concluded that the legal profession should not be expected to finance public policy considerations currently funded in-house by the Government.
At the moment, the Government are saying that they will shift responsibility from the public purse and pass it entirely from the taxpayer collectively to the legal profession exclusively. They currently meet the costs of the legal service ombudsman, whose functions will be absorbed in the Office for Legal Complaints, now to be taken over entirely by the legal profession, and part of the costs of the Legal Services Complaints Commissioner referred to in glowing terms today by the Minister and others, whose post is to be abolished by the Bill.
 The Government also meet the costs associated with the legal services consultative panel and the costs of the work in relation to the legal services regulation of the Lord Chancellor and the senior judiciary. A substantive amount of work is funded by the Government. Contributing on a continuing basis towards the cost of regulation would thus maintain the existing position rather than represent a new spending commitment by the Government. We are not asking for more responsibility, but for the status quo to be preserved in essence.
I hope that I can persuade the Minister that, although the Government will always try to reduce their expenditure commitments, the amount spent on such matters as a proportion of their expenditure is extremely small. The sum that goes to the Lord Chancellor’s budget at present relative to the other budgets of state is extremely small. I hope that the Government will agree that there is no absolute requirement to shuffle off that responsibility.
I have referred to the running costs, but I want now to say a word about start-up costs. I am talking particularly in relation to amendment No. 241. Under the present provisions of the Bill, the Government intend that not only the full continuing costs of both tiers of the regulatory system, but the start-up costs, should be borne entirely by the legal profession. Our amendment would change that and require the Government to fund the start-up costs.
Anyone would accept that it is unreasonable for all the start-up costs to be met by the profession. As we have heard from the Minister’s own mouth, the functions of the Legal Services Board are essentially to provide public assurance about the regulatory system rather than do a front-line job. It is even more unreasonable for the transitional costs to be paid by the legal profession, bearing in mind that it has its system in place and that all have said that it has been ameliorated and made more effective. To say, “Hang on, guys, you not only have to pay for what you are doing now and for what you have been doing, but for getting from where you are to where the Government want you to be,” seems unreasonable.
The Joint Committee’s look at the draft Bill, in paragraph 455, said:
“We recommend that the Government give further consideration to funding the start up costs of the new regulatory system. We understand that such assurances have been given in respect of Part 2 of the Compensation Bill which introduces a new regulatory regime for claims management.”
The Committee went on to say, in paragraph 467, that
“if the start-up costs of the new system are to be met through levies and charges on front line regulators, initial costs to the profession will be high and will be met both by practitioners and consumers. This adds weight to the argument that the start up costs of the LSB and OLC should be borne by Government.”
The Government’s only substantive argument so far is the assertion that those being regulated should pay for the regulatory system. However, there is no explanation why, for example, accountancy—a profession of a similar type, often discussed in the Bill in the context of working together—should be regulated and funded in one way, but law should now be regulated differently and should now be funded differently, which is by the practitioners themselves.
 There is no incentive in the proposals for Government to make sure that the start-up costs are limited. By definition, if the Government do the job and give the bill to someone else, there is no incentive to keep the bill down. If the Government do the job and know that they have to pay for it, there will be in-house regulatory systems to control the costs. The estimates provided by PricewaterhouseCoopers, discussed in Committee in the last few days, were very high for the transitional process. Government indications are now that start-up costs are going to be even higher. All the more reason for the Government to know that they have a responsibility, which will hopefully add to the pressure to keep the costs down.
 My last point is about the precedent across Government. It is not unusual for the start-up costs of regulatory bodies to be met by the Government, whatever is done about the running costs later on. The accountancy Financial Reporting Council, referred to earlier, had the Government meeting the full transitional costs of establishing the new body and a third of the continuing costs. That was the approach that the Government took with the Claims Management Regulator, which we discussed in a Committee like this not many months ago. Before that, the Government took the same approach to the Council for Licensed Conveyancers. There have been several precedents for one type. There is now a change. The Joint Committee did not believe the change was right. Sir David Clementi did not believe the change was right. The Government have really not made their case. I hope that they see the benefit to the taxpayer, to the consumer and to the profession from moving in an agreed way. I hope that the Minister will be helpful and seriously consider this, because at the moment there is severe discontent that all the burden is being put on the professions to pay for a system that, by definition, is a system of the Government’s creation.

Bridget Prentice: During the Report stage in the other place, my right hon. and noble Friend Baroness Ashton set out for their lordships the further work that we have done in updating the financial analysis conducted by PWC in support of the draft Bill. I have written to hon. Members to set out how we have approached that work and provide more detailed figures. Hon. Members should also now have received a copy of the supplement to the regulatory impact assessment, which was published alongside the Bill. That updates the cost figures.
As I explained in that letter, and in the supplement to the RIA, following our work on the revised costs, implementation now stands at £32.1 million and the revised running costs are £4 million for the board and £19.9 million for the OLC. Of those costs, £2.4 million will fall to the Ministry of Justice, so the Government are making a contribution.
It is obviously important that both hon. Members and the legal profession can have some confidence in the figures. I want to emphasise, therefore, that the adjustments that have been made are based on robust and detailed analysis. Baroness Ashton has set out the revised figure for implementation that will now form the basis of the implementation budget for the board and the OLC, when they finally assume management responsibility.
I come now to the principled argument about who should pay. Let me say right from the outset that I do not accept that the Government should contribute more than the £2.4 million that I have already mentioned—either to the establishment costs or to the costs of running the board and the OLC. We all know that the legal services market is thriving, and that there was a turnover of some £22 billion in 2005. The legal professions are in a very privileged position in that they operate in a market where they provide reserved legal services.
I believe absolutely that the increased consumer confidence that will result from a demonstrably independent regulatory and complaints-handling service will benefit the lawyers. The opportunities that the Bill creates for alternative business structures will benefit lawyers as well. So it seems to me entirely right that, as they will be beneficiaries, they should pay.
Another argument has been that the Bill will allow the Government to make considerable savings. I am not at all convinced of that. We will make some savings, but when we do, the savings should be invested in other priority areas where the investment is needed and where other funding sources are unavailable. I am sure that I do not need to mention other aspects within the Ministry of Justice in relation to which hon. Members on both sides would like to see us invest some of that money.
Equally I cannot accept that the Government should contribute because the board plays a public interest role. The legal professional bodies currently raise fees from the members that are not solely intended to pay for regulatory costs and that also fund important public interest activities in which those bodies participate—on human rights and law reform, for example. That approach should continue under the new framework.
The hon. Member for North Southwark and Bermondsey mentioned the arguments on funding arrangements that are in place for other regulatory organisations—in particular, the Financial Reporting Council. I have considered the funding arrangements of other bodies, including the FRC, the Council for Healthcare Regulatory Excellence, the Financial Services Authority, the financial services ombudsman, the pensions regulator, the Office of Communications, and the claims management regulator. I discovered no rigid approach; the Government fund establishments and running costs in some cases but not others.
On the FRC in particular, its accounting, auditing and corporate governance activities are funded by a tripartite arrangement with contributions from the accountancy professions, the business community and Government. Other costs, connected with audit inspections and the investigation and discipline of accountants, are funded entirely by the accountancy professions. The Government provide no funding in relation to actuaries. There are therefore big differences between systems, and the decision must be made on a case-by-case basis. Our starting position is that unless there is a compelling case for public funding there should be no increase in public expenditure, and I do not believe that there is such a case in the present instance.
 I know that the legal profession has argued that, if the Government made a contribution, that would incentivise them and us to reduce costs. We are absolutely committed to ensuring value for money in the reforms. That is why the Bill contains the safeguards that it does. The levy rules are subject to extensive consultation requirements, the Lord Chancellor’s consent and parliamentary scrutiny through the negative procedure and, under clause 147(5)(c), the affirmative procedure. All those measures will ensure that the new bodies’ spending will be properly contained. As I said, the revised figures that we have announced will form the implementation budget for the board and the OLC. That is another check on costs.
I am conscious that there is some concern about the impact that the costs involved in establishing the board and the OLC might have on individual practitioners. I reassure Members that the Government are clear that we will not seek to recover those costs in a single year; rather, we will do so on a phased basis, and we share that with the professionals in every discussion about the matter. That will help relieve any potential pressure on the bodies themselves and on their practitioners.
I will continue to work with stakeholders on the details of the process, just as I want the Government to work with them on all other aspects of the Bill’s implementation. Only last Friday, officials held a useful discussion with stakeholders about costs, and it was agreed that further individual meetings with stakeholders will take place to ensure that they are fully sighted on all the issues, methodology and assumptions underpinning our work on cost. That open dialogue is important if we are to retain the confidence of the professional bodies as well as of consumers and others. I am committed to ensuring that we do so. On that basis, I ask the hon. Member for North Southwark and Bermondsey to withdraw his amendment.

Simon Hughes: There was quite a lot in the Minister’s reply. I shall pick up on a couple of points, because the issue is substantive and significant for the professionals.
First, the Minister said that the Government will contribute £2.4 million. Can she put on the record why that sum has been plucked out? She gave figures according to the latest assessment that she called robust. Can she put on the record what percentage of the start-up costs she and her Department believe that sum represents? I have been arguing that the payment is the start-up costs and a third of the running costs. It would be helpful to see where we are starting from in this debate, or where we have got to in our difference of views.
Secondly, I should be interested to know whether the Government have any independent support for their position. I have not heard the Minister cite any. If there is any, where does it come from, and will the Government put that on the record? Independent support exists for the position for which I am arguing.
Thirdly, the one point with which the Minister did not deal was the argument that if the profession is to fund all but the £2.4 million, that does not support the proposition that the board is a brand new body, entirely independent of the profession, set up by Government to give that independence. It is inconsistent, because the system will still be funded by the people against whom complaints will be made. In terms of showing the independence of the agency, I do not think that the Government have made the case.
Fourthly, the Minister conceded that savings will be made by Government. She said that they were small. I should be grateful for her best estimate on advice of the smallest and largest band of savings a year in each of the first three years so that we can understand, because we are all interested in the budget of the Ministry of Justice. I am intrigued, as other people watching and listening will be, to know what the expected savings are. It would be helpful to have that on the record.
Lastly, the Minister said, “If we make some savings, there are all these wonderful candidates for other spend.” The one wonderful candidate that the hon. Member for North-West Norfolk and I have argued should get more expenditure is legal aid, but Ministers in the Department are saying that there will be no more expenditure on legal aid. On Sunday, according to my television, the new Labour leader said to the nation that the new Government will listen and will serve the people and bow down in front of them. They should therefore be listening.
If the Minister had said to us that the Government were going to make savings of £1 million, which would be added to the legal aid budget, we would have been tempted, but I have not heard her say that. She has said that there will be some small savings, which the Government will spend somewhere, although she will not tell us where. She tells us that she still does not know whether the Department will get a significant increase in the comprehensive spending review, which has now been delayed until the autumn.
I would be grateful for quick answers. With the agreement of the Committee, I shall not press for a Division now. The Minister dealt with the comparative points to an extent. I want to go away and examine accountancy set-up costs, accountancy running costs and the costs of the Healthcare Commission, which the Minister talked about. There are issues that it would be sensible to consider again. If she can answer the specific questions, we can go into that debate better informed.

Bridget Prentice: I will do my best to answer at least some of the questions that the hon. Gentleman has raised. I will, of course, write to him and to the Committee about any that I do not answer.
The figure of £2.4 million relates to the closure of the Office of the Legal Services Ombudsman and the Office of the Legal Services Complaints Commissioner, plus the Ministry of Justice’s costs associated with the internal running of the programme. That is about 7.5 per cent. of the implementation costs. The hon. Gentleman said that he felt that the independence of the board and the OLC would be compromised, to which I say that both the Financial Services Authority and the Financial Ombudsman Service are entirely funded by the professions that they regulate. I do not think that any of us consider that they lack independence. Despite the fact that the professions will provide the funding, there is no need to believe that the board and the OLC will not be absolutely independent. 
On some of the other issues, I will have to write to the hon. Gentleman. I want to ensure that everyone on the Committee is aware of how we see the money being spent. He made a plea for increased spending on legal aid; I had a feeling in my heart of hearts that that would be the first call, should there be any spare money. It is not for me to make those spending commitments on behalf of the Government, but I will try to give him the figures of likely savings to the Ministry of Justice and an idea of how the Department might use them.

Simon Hughes: I am grateful for that response. By way of a postscript, I add that we have today been given the chance to pick up the Criminal Justice and Immigration Bill, which is the first product of the Ministry of Justice—the first Bill born of its womb. I venture to suggest that we might save a lot of money if we did not have yet another Bill with more apparent remedies, just like the past 10 years’ worth of criminal justice Bills. Will the Minister be kind enough to tell us the cost to her Department of implementing that Bill? Some of us would say that that money would be better spent elsewhere. I look forward to as full an answer as possible. I would certainly rather that the Committee has all the information to look at. We will return to the issue on Report, but in the meantime, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 17, in clause 174, page 92, line 16, leave out ‘the Compensation Act 2006’ and insert ‘any other enactment’.—[Bridget Prentice.]

Clause 174, as amended, ordered to stand part of the Bill.

Clauses 175 and 176 ordered to stand part of the Bill.

Clause 177

Duties of regulated persons

Simon Hughes: I beg to move amendment No. 242, in clause 177, page 94, line 33, at end insert—
‘( ) The duty to comply with regulatory arrangements overrides any obligations which a person may have, including to shareholders (otherwise than under the criminal law), if those obligations are inconsistent with the duty to comply with the regulatory arrangements.’.
I was so excited about the new Criminal Justice and Immigration Bill that I had not caught up with the fact that this amendment would be with us so quickly. It would add for the purpose of clarity a statement that would give priority to the duty to comply with regulatory arrangements. It would be inserted after subsection (1), which sets out the duties of regulated persons.
We are now into part 8; we have made great progress, and we are in the home stretch. This aspect of the Bill is called “Duties of regulated persons”, as is the clause, which starts by saying:
“A person who is a regulated person in relation to an approved regulator has a duty to comply with the regulatory arrangements of the approved regulator”.
The amendment would set out that that statement overrides any other obligations that that person may have,
“including to shareholders (otherwise than under the criminal law), if those obligations are inconsistent with the duty to comply with the regulatory arrangements.”
The Members’ explanatory statement, of which some of us are keen fans, says that the amendment
“is intended to put beyond doubt that for all those within the regulated sector, the duty to comply with regulatory arrangements is paramount”.
The real reason for the amendment is that if the Bill is passed as the Government want it to be, alternative business structures will be set up, organisations with people from different professions will work together, and they will not be governed as the legal profession on its own was governed in the past, simply by its own regulatory objectives.
This debate is like the earlier one about the priority of access to justice and the Legal Services Board. The amendment would ensure that, beyond peradventure, people understood and were in no doubt about the priorities. The Minister may say that the drafting is not perfect, that it is not in the right place or other things. I hope that she will say that subject to the criminal law, there must be an overriding duty of compliance, which the Bill should be absolutely express about for the avoidance of doubt. I await with interest her reply.

Bridget Prentice: Sir Nicholas, I am sure that you are aware that this issue was debated on several occasions in the other place. We made it clear then that the duty of lawyers and their practices to comply with the professional conduct rules and other regulatory arrangements is absolutely essential, which is why we have placed those obligations on a statutory footing and written several supporting safeguards into the Bill. There should be no scope for it to be compromised by other obligations—to shareholders or otherwise.
The Bill already achieves the amendment’s objective. If the lawyer or the licensed body were to breach professional conduct rules, they would be acting inconsistently with clause 177 and breaking the law. Approved regulators would be able to take whatever remedial action was necessary if the breach were serious—for example, allowing client confidentiality to be compromised in order to deliver a better return for shareholders. That would be grounds for revoking a licence and for permanently disqualifying the individual from ever working in an ABS firm again. There is no way that compliance with other obligations could ever provide a defence for that. Directors of that licensed body could not countenance breach of the law in the name of their duties to shareholders. If that were the case, directors could cause their companies to breach regulatory obligations all the time and then defend their actions by saying that they did it in the name of shareholder obligation. That simply is not how company law works.
Directors cannot take decisions that cause breaches of statutory obligations in the name of an obligation to their shareholders. They must abide by their statutory obligations, and their duties to shareholders do not justify any breach of those obligations. There is no conflict, so there is no need for an override provision. We have had detailed discussions on this matter with the FSA and the DTI, both of which confirmed that directors cannot use their duties to shareholders to justify the breach of a statutory obligation. They also confirmed that directors’ duties, including those to promote the success of the company as set out in the Companies Act 2006, presume that directors and their companies will be subject to all kinds of other obligations—statutory, fiduciary and regulatory. Section 172 of the Act co-exists with those duties; it does not conflict with them, so there is no need for an override provision.
I fear that the introduction of an override provision would cast out the principle of co-existence and would effectively state that such clauses are needed to ensure that directors comply with their statutory obligations, which clearly is not right. Such a provision might create negative influences for other duties, which could be damaging and could lead to uncertainty in applying principles that are vital to ensure consumer protection and to comply with legal obligations.
The importance of that principle is not unique to legal services, and I certainly do not want to jeopardise the interests of consumers in other sectors and create uncertainty about the application of company law by incorporating an unnecessary provision. I do not think that an override provision is needed, and accepting it might compromise the position that is set out clearly in the Companies Act. It is well known that directors cannot use their obligations to shareholders to override statutory obligations. I hope that my comments have reassured the hon. Gentleman enough for him to withdraw the amendment.

Simon Hughes: I am grateful to the Minister for her considered reply, and I take seriously what she said about having consulted the DTI and others and that it is their clear view that such protection is not needed. She was very clear, and people will be able to look back through the Hansard records to read what has been said about statutes and statutory protection in certain appropriate circumstances.
Obviously, we are all clear that the criminal law reigns supreme, but I want to clarify one thing. I understand the Minister to have said that obligations that do not of themselves give rise to criminal breach, but are obligations because the regulator has imposed guidance or required certain things, are still overriding obligations as set out in the Bill, and that one cannot pray in aid of shareholders’ interests and set those obligations against each other. Criminal law, of course, comes first, but other obligations are expressly to take precedence over any shareholder obligations, even if they do not have a criminal sanction. I think that that is what the Minister was clearly saying, but I would be grateful if she could clarify it. If that is the case, it might provide the necessary reassurance. I would not want any amendment to be accepted that compromises the achievement of that hierarchy of obligations.
Finally, we are looking at different sorts of firms, maybe run by non-lawyers, such as big insurance or investment companies or private equity firms, which will need to know what the score is. They need to know absolutely that if they come into this business, and if ABSs take off and that part gets through—a lot of discussion still needs to take place between the two Houses—in England and Wales, they must be governed by the same regulatory regime as that which governs law-only professions and which has worked well in that context recently.

Bridget Prentice: I think that I can give the hon. Gentleman that reassurance. Statutory obligations are key. He is right to talk about criminal sanctions at the top of the hierarchy, but any statutory obligations will override any obligation to shareholders. I hope that that gives him that reassurance. He is quite right to say that those who might own some of those firms in the future must be very clear that that is the case absolutely. Hopefully, this debate will have gone some way to making that clear to them.

Simon Hughes: I am grateful. I hope that when the Bill is passed, as I am sure that it will be in some form, and when anyone applies to set up an ABS, if permitted—some of us are still unhappy about that, but we will continue that debate elsewhere—they will get a copy of the “Minister says ‘obey!’” rule which could be sent gratis. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 177 ordered to stand part of the Bill.

Clause 178 ordered to stand part of the Bill.

Sitting suspended.
[Continued in column 433]